Computer systems industry

Industry Snapshot

GENERAL INDUSTRY: Information Technology

CAREER CLUSTER: Information Technology

SUBCATEGORY INDUSTRIES: Computer Disaster Recovery Services; Computer Facilities Management Services; Computer Software Installation Services; Computer Systems Design Services; Custom Computer Programming Services

RELATED INDUSTRIES: Computer Hardware and Peripherals Industry; Computer Software Industry; Internet and Cyber Communications Industry

ANNUAL DOMESTIC REVENUES:US$469.4 billion (Statista, 2024)

ANNUAL GLOBAL REVENUES:US$486.5 trillion (Market Research, 2022)

NAICS NUMBER: 5415

Summary

The computer systems industry provides goods and services designed to enhance the storage, manipulation, and transfer of digital data through computer networks. Such networks may exist within single buildings or other limited areas, constituting local area networks (LANs), or may span much larger areas or connect disparate, widely separated locations in the world, constituting wide area networks (WANs). In the vast majority of cases, the Internet provides the connection for these networks. The Internet has rapidly evolved from its beginnings in the late 1960s as a research project funded by the Department of Defense to become an indispensable tool for many types of businesses involved in electronic commerce (e-commerce). Along with this evolution of communication networks, there have been countless technological advances involving the physical components of computers and communications, called hardware, and the written computer code in programming languages, called software. These devices drive and facilitate the storage and communication systems—such as databases, web pages, and other interactive Internet information portals—that constitute computer systems. All these computer components are interrelated and compose the computer systems industry.

History of the Industry

It was during World War II that computers such as the Electronic Numerical Integrator and Computer (ENIAC), developed by John P. Eckert and John W. Mauchly, began to be used to help decide which enemy targets to bomb. To decide on a location, many factors needed to be considered, including any differences in height between the bomb launcher and the intended target, wind speeds, and the shapes of the bombs, which required a complex mathematical calculation involving several equations. Calculators had not been invented yet. Although the ENIAC was huge by present-day standards, using over twenty thousand vacuum tubes and filling entire rooms, this was the birth of the computer systems industry.

Throughout the 1940s and 1950s, computers continued to decrease in size while increasing in speed and capacity as a result of technological advances, such as the invention of the transistor in 1947 by John Bardeen, Walter Brattain, and William Shockley; magnetic ink character recognition (MICR), used by the banking industry to read checks; and the integrated circuit chip by Jack Kilby and Robert Noyce in 1958. During this time, the first useful high-level programming language, the IBM Mathematical Formula Translating System (or FORTRAN), was developed primarily for scientific applications. It was soon followed by the development of the second useful high-level programming language, the Common Business-Oriented Language (or COBOL), for business applications.

The application of computers to the banking industry gained importance, and in 1962 the first computer game was invented by Steve Russell at the Massachusetts Institute of Technology. In the 1960s, silicon microchips became available that allowed the large mainframe computers to decrease in size and led to their manufacture by many companies, including International Business Machines (IBM). The RAND Corporation developed a fully distributed, packet-switched network to facilitate military communication, and researchers at the National Physical Laboratory developed hardware to physically connect computers so that they could transmit digital information between them. Improvements in the hardware of these microcomputers throughout the 1970s led to their mass production, thus creating a rapid-growth segment of the computer industry.

Meanwhile, the linking of computers became available in 1969 with the creation of the Advanced Research Project Agency Network, or ARPANET, developed by the U.S. Department of Defense. ARPANET originally linked the Stanford Research Institute with the University of California at Santa Barbara, the University of Utah, and the University of California, Los Angeles. It expanded to establish communication destinations, called nodes, at fifteen locations, including the National Aeronautics and Space Administration (NASA), the Massachusetts Institute of Technology (MIT), RAND Corporation, and Harvard.

In 1973, Bob Metcalfe invented Ethernet, in order to allow multiple computers to share digital information and computer resources, such as printers and files, while he was working at Xerox. Two years later, Larry Roberts developed Telnet, which was the first commercial packet-switching network to link customers in seven cities. In 1979, Metcalfe left Xerox and persuaded the companies of Intel, Digital Equipment, and Xerox to promote Ethernet as an international standard for the computer industry, causing it to become the most widely installed LAN. Metcalfe later went on to form 3Com Corporation. Numerous pieces of computer hardware were developed to facilitate Ethernet, and one of the most successful companies producing such hardware, Cisco Systems, shipped its first product in 1986. By 1990, Cisco achieved annual revenues of $69 million, and by 1998, these revenues had reached $8.46 billion. ARPANET had been the predecessor of today’s Internet, and by 1993 the Internet was used to link WANs into a “network of networks,” which became known as the World Wide Web and was facilitated by the innovations of Tim Berners-Lee of MIT and Marc Andreessen of Netscape.

The Industry Today

Computer information systems generally complete tasks by using computer systems that can range from a single personal computer and its software to networks linking thousands of computers to share resources, including printers, Internet access, and databases. The computer systems industry has led the way in the establishment of the digital economy because it has developed into a facilitator of business via the growth of e-commerce and of computer systems designed to support business objectives by facilitating communication and collaboration. Modern businesses use databases and computational abilities to improve decision making and productivity, reduce costs, enhance customer relationships, and develop strategic applications. These strategic applications include online services for health care, insurance, banking, auctions, electronic payments, travel, and even online social networking websites and online dating sites that can earn money by selling advertising space.

The digital economy allows the U.S. online population of approximately 250 million users to communicate and conduct transactions involving graphics (including photographs, maps, and X-ray images), audio recordings (including music, audio books, podcasts, and lectures for online classes), videos (including television programs, films, and original material), and many types of computer software applications. In addition, Internet users can purchase nondigital goods and services, from airline tickets to books to almost any other product, and they can participate in online auctions and gambling. The wealth of digital information available on the Internet and the vast array of goods and services available for purchase have caused search engines allowing users to find what they are looking for online to become increasingly important. The companies that develop these search engines have grown significantly, as have companies that optimize websites’ code to ensure that they appear near the top of search engine results, a field known as search engine optimization, or SEO.

Today, handheld devices allow workers to update inventory counts, print shelf-tags anywhere within a store, and enter order information for out-of-stock items. Handheld devices are sometimes given to customers to provide information regarding price comparisons and recommended products. A cell-phone-sized portable device called a mobile manager facilitates communication and supervision of employees. Cart-mounted tablet personal computers (PCs) can allow customers to check prices while shopping, and employees can also use tablet PCs to communicate with one another and with managers wirelessly. Personal scanners are given to customers at Food Lion grocery stores. When a customer picks up an item, it is scanned before being placed into a shopping cart, and the final tally is downloaded to the cash register when the customer is ready to check out.

More than 50 million people in 2008 participated in social networking on websites such as Facebook, MySpace, YouTube, and LinkedIn, causing these companies, along with Google, Apple, and Yahoo!, to become major economic driving forces and making the computer systems industry one of the few growth industries today. These companies are leading the way in growth for health care, commerce, travel, politics, finance, and entertainment. Enterprise resource planning (ERP) and customer relationship management (CRM) combine business management tools with the technological tools of the computer systems industry to facilitate countless, routine daily transactions including banking, purchases of goods, and rental of films and other media.

The explosive growth in Internet-based businesses resulted in approximately 1.5 million people being employed in the computer systems industry in 2008. Because the technology of the computer systems industry has continued to develop and find an increasing number of applications in recent years, the workforce for the computer systems industry is considerably younger than those of other types of industries, with more than 60 percent of the workers in the computer systems industry being age forty-four or younger. Less than 50 percent of the workers in all other industries fall within this age demographic.

Approximately 78 percent of companies within the computer systems industry employ fewer than five workers. Thus, small companies are a significant component of the industry. However, the majority of jobs can be found within companies that employ at least fifty employees. Many employees within the computer systems industry with job positions such as computer support specialists, programmers, consultants, and systems analysts are able to work from home by linking directly to computers at the location of the employer or client via the Internet.

With so many e-commerce and social networking sites allowing users to share a great deal of personal information, there has been an increase in identity theft and the need for network security systems to protect against hackers. Maintaining the security of computer systems has become an important discipline, with several certificate programs available to train employees for this growing job market. These security certifications include Security+, Red Hat, Network+, and Certified Network Associate (CNA) certifications. Some certificates are vendor-specific, such as Cisco’s CNA certification, while others are vendor-neutral, such as the Security+ and Network+ certificates.

Numerous other certificate programs exist for network administrators, database administrators, software engineers, and network engineers. The wireless transmission of data has become especially susceptible to theft by hackers. Many certificate programs are offered by Microsoft to address this problem. These certificate programs are so important and widespread that they have developed into an industry of their own, with many opportunities for educators and trainers in various security, network, database, and software applications.

The computers systems industry could not function without specialized computer hardware that enables computers to communicate. Manufacturing such hardware is another area within the industry that has seen explosive growth, providing numerous opportunities for employment to support the design, manufacture, and sales of constantly evolving computer hardware, as well as for electronic consumer gadgets to play music and videos and to share e-mail and photos between any geographic location. A network interface card (NIC) is a device that is inserted into a computer’s motherboard to provide the physical, electrical, and electronic connections to network media that allow various peripheral components to be attached electronically.

Traditionally, coaxial cable has been used to connect several computers or other network nodes, including printers, to central communication devices called hubs. Switches, bridges, routers, and gateways are examples of additional hardware devices that are manufactured by companies within the computer systems industry and are used to connect network segments. The Open Systems Interconnect (OSI) model was developed as a guideline to describe the protocols, or rules of communication, followed by various hardware manufacturers to ensure that their products will be compatible with the systems into which they will be integrated. This model is still used today, and it makes it possible to replace one piece of equipment made by one manufacturer with a similar piece made by a different manufacturer. The model has greatly facilitated the growth of the computer systems industry worldwide.

Industry Outlook

Overview

The outlook for this industry shows it to be dramatically on the rise. According to the Bureau of Labor Statistics (BLS), the computer systems and information technology (IR) is one of the fastest-growing industries in the United States, and employment in this industry is projected to increase much faster than average between 2022 and 2032. Electronic commerce sales were $1119 billion in the United States in 2023 and were expected to increase by 11.82 percent increase from 2024-2028.

High-speed Internet connections in the United States increased from more than 80 million connections in 2008 to 307 million in 2022, increasing the demand for the many peripherals and Internet connectivity devices that make use of such connections. By 2022, more than 90 percent of US households had access to the Internet. Wireless Internet connectivity is also increasing dramatically, driven by the proliferation of handheld computers and smartphones. These new devices lead to continual increases in both available positions and salaries within the computer systems industry. As the Internet and its use for e-commerce become even more important, businesses will continue to increase their application of computer systems, including the most recent technological advances that can be affordably purchased. Thus, the integration of new hardware, software, and communications tools will drive the industry and will also increase the need for experts in network security and support services.

E-commerce is becoming increasingly dependent on the use of wireless technology to operate. Mobile devices such as smartphones continue to transform the way that companies and individuals communicate. These devices pose additional security problems, and much research and development is aimed at making wireless communications more secure. The cost of mobile devices to consumers is expected to continue to decrease, and this decrease will lead to increasing availability and sales.

Wireless devices will find increasing applications in all kinds of industries, ranging from the health care industry to real estate to education. Webinar training is gaining in popularity, and many computer systems consulting jobs will assist the implementation of wireless devices into education, health care, and real estate. Thus, the demand for computer and information systems managers, computer systems programmers, computer systems software engineers, computer systems analysts, computer scientists, computer systems support specialists, and computer systems administrators is expected to remain higher than average, according to the BLS.

Employment Advantages

Because all industries are becoming more dependent on computer information systems, employment opportunities within the computer systems industry are expected to continue to be excellent, especially for those with specialist certifications and higher levels of training. For example, the BLS projects that job opportunities for computer systems analysts will grow faster than the average for all occupations through 2031.

Because of the high demand for skilled workers, employees in this industry experience less gender and age bias, tend to have more lucrative benefit packages along with salaries, and have more potential for advancement. Typically, entry into the industry is less restrictive than it is in many other industries. Although most employees have either bachelor’s or associate’s degrees in computer science, information technology, or information systems, it is possible for job seekers to enter the computer systems industry with a degree in an entirely different field, as long as they have the required job skills. There are many certification programs representative of these job skills that can substitute for a specific computer science degree. Thus, careers within the industry are potentially ideal for those who want to make a career change.

Annual Earnings

According to Statista, the U.S. computer systems industry earned revenues of around $469.4 billion in 2023. According to the BLS, the median salary for computer systems analysts in the United States was $102,240 in 2022. Earnings for various project managers with certifications tend to be higher.

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